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Description
Flashcards by leighrowland, updated more than 1 year ago
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Created by leighrowland
almost 11 years ago
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| Question | Answer |
| Define the economic problem | There are limited economic reasources to meet unlimited human wants. |
| Name & Explain the 4 factors of production | LAND ~ includes all naural resources LABOUR ~ the human effort CAPITAL ~ manuactured resources which have been made in order to make things ENTERPRISE ~ brings together the other factors in order to produce a product profitably |
| Define opportunity cost | The cost of a decision in terms of the beneits of the next best alternative forgone |
| Define specialisation | occurs when indvidual workers concentrate on a particular task within the production process |
| What does a PPC curve show? | The maximum potential output of 2 goods that can be produced in the current time period if all resources are eficiently employed |
| What causes an outward shift in production possibility curves? | The quantity and/ or quality of its economic resources have increased |
| What causes an inward shift in production possibility curves? | A decline i the quantity and/ or quality of its economic resources |
| What is a market economy? | prices and the operation of the price mechanism create incentives that direct resources to where they are most needed |
| What is a command economy? | The government takes control of resource allocation. All businesses are state ownd enterprises |
| What is a mixed economy? | In reality all ecomonies are mixed. Resources are allocated through a combination of market forces and government direction |
| Define & Explain the 4 functions of money | standard for deferred payment ~ arrange to pay for a good today for the future store of value ~does not lose its value for future payments unit of account ~ value goods in money terms medium of exchange ~ used t exchange goods and services |
| Define market | wherever consumers and producers come together for the purpose of exchange |
| Define demand | Refers to the quantity of a product that buyers are willing and able to buy at various prices over a period of time, ceteris paribus |
| Define consumer surplus | the difference between the price a consumer actually pays for a product and the price they are willing to pay |
| Determinants of demand | 1. Changes in price/availability of substitue goods 2. Changes in price/availability of complementary goods 3. Change in income of consumers 4. Changes in population 5. Expectations about future rice movements 6. Changes in tastes |
| Define supply | refers to the quantity of a product that suppliers are willing and able to sell at various prices per period of time, ceteris paribus |
| Producer surplus | The difference betwen the price that suppliers are willing and able to supply at and the price they actually get |
| Define price elasticity of demand | the sensitivty f quantity demanded to a change in price |
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